It’s time for companies to trust start-ups

It’s time for companies to trust start-ups
  • PublishedMay 12, 2023

Salma Kabbaj, founder of the African innovation accelerator Impact Lab, explains the role of
her structure, between supporting start-ups in their development and advising large
companies or administrations looking for agility.

How would you define Impact Lab?

We are specialists in entrepreneurial innovation. We develop incubation and acceleration programmes for start-ups, depending on their stage of maturity. And we also provide innovation consulting services to large companies. Impact Lab was born out of a private initiative, founded in 2015, with no institutional or academic ties. We were convinced – and still are – of the importance of stimulating entrepreneurial innovation as a lever for the emergence of new solutions to social and economic problems in Morocco and Africa.

We support innovative entrepreneurs who present disruptive solutions to key issues: the agricultural sector, access to health products, social and economic integration of fragile populations, etc.

We provide these entrepreneurs with comprehensive support programmes and tools that enable them to move faster in deploying their solutions. These tools include training, in various fields ranging from innovation methodologies to business management, but also personalised support and contacts with experts, partners or potential investors.

What type of companies or sectors do you focus on?

We have worked with over 260 start-ups in 21 African countries. For the past two years, we have focused on a few key areas: Agritech, Healthtech and Fintech. One example is Sand to Green, which recently raised one million euros and offers a global solution for cultivating arid land. We are also currently supporting a Tunisian company, Cure Bionics, which produces prostheses that allow an artificial hand to be used as well as a normal hand, thanks to a fine analysis of the signals emitted by muscle tissue.

Can it still be said that in the world of African start-ups, Anglo-Saxon countries are privileged compared to French-speaking ones?

The maturity of ecosystems in English-speaking countries is clearly greater. We see that last year, 75% of funds were raised by four countries (Egypt, Nigeria, South Africa, Kenya). There are cultural reasons, notably linked to risk-taking, and others linked to the size of the populations. It is easier to validate an innovative solution in a significant market like Nigeria or Egypt. Start-ups developing in French-speaking African countries, which have a smaller population, need to quickly conquer markets to achieve an interesting level of growth.

Moreover, the French-speaking regulatory framework, often inspired by the French one, is often more advanced, and therefore more restrictive, than in Anglo-Saxon countries.

However, since the start of our activities in 2015, we have witnessed a nice evolution of start-up ecosystems in French-speaking Africa. In Morocco, for example, talent is much more attracted to entrepreneurship. We are seeing more experienced profiles with high potential, who are taking the gamble of setting up their own start-up; this is no longer seen as a plan B to a career as an employee.

Impact Lab claims to be an intermediary between start-ups and large companies as well as administrations.

Indeed. We are convinced that we can create new development models that are both financially profitable and have a positive social or environmental impact. And in this vision, we need to support the innovators, but also ensure that their ideas are adopted on a large scale. So public administrations or larger companies need to buy into these solutions, understand their usefulness and help them reach scale.

What is your approach to your institutional partners?

We first analyse their challenges and expectations. Let’s take the case of the Moroccan Ministry of Agriculture, which is faced with the challenges of water stress that threatens the sector as a whole. We know that technology can respond to this problem. Impact Lab therefore mobilises its networks to identify start-ups, whether Moroccan, African or international, which provide solutions relevant to the local context, and facilitates collaboration between these companies and the stakeholders concerned.

Basically, the approach is the same with private companies: identify their strategic and operational challenges, put them in touch with start-ups that provide solutions and ensure a successful collaboration. We work on marketing issues, for example, for a company that wants to reach a new customer segment that is currently difficult to target; or a maintenance optimisation issue, for industrial companies, in order to avoid stoppages or breakdowns; or issues relating to the automation of certain tasks, so that employees can devote themselves to activities with higher added value.

For example, we have worked with the BCP group to meet the challenges of improving the customer experience in branches, developing the financial services offer or providing access to unbanked populations, in particular through artificial intelligence solutions that capitalise on the data collected by the group.

Our approach is to encourage collaboration, but also to encourage change within companies, so that they integrate certain methodologies or approaches of start-ups. For example, in the process of digitalisation, we encourage companies to adopt an approach centred on the problem to be solved and on the user. This avoids unnecessary investments in solutions that are not adapted to the real needs of customers.

A way of helping large companies to outsource their R&D?

You could put it this way, but there are still parts of innovation and research that remain within large structures! If only because of their strategic or confidential nature…

Trusting start-ups means capitalising on structures that are much more capable of innovation. Large companies have a certain rigidity, which is normal because their role is to industrialise a product, service or process in order to deploy it in the most optimal way possible. In doing so, they naturally lose agility, which prevents them from innovating.

On the other hand, the start-up brings a proximity to the field and an ability to adopt an iterative approach that allows ideas to be tested quickly and at reduced cost. Addressing start-ups allows us to explore a wider range of opportunities and to collect crucial information, markets, trends, etc.

What is Impact Lab’s role in financing?

We do not invest ourselves but we help companies to access financing tools. The financing ecosystem for start-ups in Africa is still limited, clearly, compared to the needs, even though we are finding more and more African investors or international investors interested in Africa. The continent was the only one to maintain a positive fundraising dynamic in 2022.

More is needed, especially when we talk about early stage fundraising, which is characterised by a high level of risk. These fundraisings, which are generally done at local level, are essential to enable the start-up to acquire the necessary credibility to be able to turn to international investors later on.

You insist on supporting women-led businesses. Do they need a different approach?

Basically, no… but our ecosystems need a general awareness of the biases that can exist, both in communication and selection mechanisms and in support approaches, to the disadvantage of women. It is essential to give more media coverage to the success stories of women entrepreneurs, in order to encourage women to project themselves into an entrepreneurial posture. Ecosystem actors must also ensure that communication about start-up opportunities is inclusive, both in the visuals used and in the turns of phrase or selection criteria. The constitution of selection panels also plays a decisive role, and an equal representation of men and women is essential to reduce the risks of discrimination, which is often unconscious.

However, there are many initiatives in favour of female entrepreneurship in Africa.

Yes, but clearly, the results, particularly in terms of access to finance, are not there! The phenomenon is not only African, by the way. In Africa, companies founded by women represent about 3% of fundraising, in the United States, it is even less, about 2%! And the trend is downwards between 2021 and 2022, which is hardly reassuring.

Do you have any other programmes underway?

We have just launched the second edition of the I3 (Investing in Innovation) programme, financed by the Bill & Melinda Gates Foundation, which supports African start-ups in the health sector. This second edition will enable us to connect companies that facilitate access to health products with key partners in the African health sector and investors.

In addition, we are organising with the French Institute, on 30 May in Casablanca, the Safir Forum of Social Entrepreneurship in Casablanca, a meeting to promote the socio-economic inclusion of young people in North Africa and the Middle East. This event will bring together experts from the region, and will aim to highlight the key issues of social entrepreneurship as well as entrepreneurial success stories.

Finally, we are participating in the Fashionomics Africa programme to support innovative African companies in the fashion and textile sector. Many African entrepreneurs are positioning themselves with innovations to produce and consume in a more sustainable way in an industry that is among the most polluting internationally.

Does the context remain promising in the current economic climate?

The economic situation does not impact the activity of start-ups, we have seen with the pandemic that a crisis can bring about innovations and changes. On the other hand, we are seeing a certain reduction in investments, a phenomenon that began in 2022 in Europe and the United States. Last year we saw a surprising resilience in African ecosystems, but the beginning of 2023 is more difficult, both in terms of the number of transactions and the amounts invested. So the challenge is to secure the fundraising and in this context, the earliest start-ups will have more difficulties than in previous years, as investors are likely to turn to safer projects.

Written By
Laurent Soucaille

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